Published on March 7, 2014
How Manufacturers can Support e-Invoicing in Europe, Latin America and Mexico
Agenda Industry trends E-invoicing implementation choices Regional & country specific regulations Industry focused e-Invoicing initiatives Case studies OpenText Confidential. ©2014 All Rights Reserved. 2
Today’s Manufacturing Industry
Rebooting Today’s Global Supply Chains Global recession, wage strikes, natural disasters and changing consumer demand are leading to manufacturers having to restructure their global supply chains OpenText Confidential. ©2014 All Rights Reserved. 4
Today’s Manufacturing Supply Chain Distributed Operations in Multiple Countries Engineering R&D Regional Marketing & Finance Engineering R&D Manufacturing Sales Manufacturing Sales Global HQ Engineering R&D Manufacturing Back Office Manufacturing Sales Western Expansion Back Office Sales Near-Shoring China Expansion OpenText Confidential. ©2014 All Rights Reserved. 5
The Manufacturing Industry Faces Interesting B2B Challenges B2B Consolidation or Provide Global Improve Integration to Modernisation Interoperability ERP Systems Extensive M&A activity Increasing need to provide Consolidation of ERP requires B2B network connectivity to global instances and upgrade to consolidation to reduce manufacturing hubs in both new modules is driving new costs and improve established and emerging ERP/B2B integration efficiencies markets projects OpenText Confidential. ©2014 All Rights Reserved. 6
The Manufacturing Industry has some Interesting B2B Challenges Support Expansion into Adhere to Complex Increase Supply Chain Emerging Markets e-Invoicing Regulations Resilience Introduction of new global More countries such as Recent natural disasters manufacturing hubs is Brazil and Mexico are now have led to companies leading to a need to mandating the use of e- needing to improve supply improve on-boarding and Invoices as a condition of chain disaster response ensure 100% supplier doing business within their procedures automation country OpenText Confidential. ©2014 All Rights Reserved. 7
Trading Grid® Provides a Single Integration Point Into the Enterprise Plant 2 HQ Plant 1 OpenText Confidential. ©2014 All Rights Reserved. 8
B2B Complexity In Manufacturing Extends to e-Invoicing Understanding the different regional specific e-Invoicing standards & requirements Traditional EDI or a dedicated e-Invoicing service provider? OpenText Confidential. ©2014 All Rights Reserved. 9
Introduction to e-Invoicing for Manufacturers
Paper is Still the Problem Companies continue to send and receive paper invoices Finance is still a paper-heavy business function. …nearly 77% of all incoming invoices are still paper-based Approx. 16bn B2B invoices in Europe €200bn in corporate savings possible Approx. 12bn B2B invoices in the US $230bn in corporate savings possible Paper invoice processing: €17- €60 per invoice,10-55 day cycle OpenText Confidential. ©2014 All Rights Reserved. 11
Why Change? Compelling benefits across Finance Reduce Costs Lower invoice processing costs (60%-80%) Reduce AP/receivable labour (40% - 50%) Reduce late payment fees/fraud Automate Processes Reduce invoice cycle times Eliminate invoice data entry and errors Improved data quality & matching Simple financial reporting Increase prompt payment to terms Speed dispute resolution Gain Strategic Value Competitive advantage Optimise working capital Manage supply chain financial risk Corporate social responsibility Regulatory Requirements Global e-Invoicing legislation European late payments legislation Government e-Invoicing mandates OpenText Confidential. ©2014 All Rights Reserved. 12
Why Change? Compelling cost savings potential Cost of processing paper for the buyer €17.60 per invoice Buyer e-invoicing cost €6.70 per invoice, 62% savings Cost of processing paper for the seller €11.10 per invoice Seller e-billing cost €4.70 per invoice, 57% savings Source: Billentis, 2012 OpenText Confidential. ©2014 All Rights Reserved. 13
What is the Invoicing Process? Different perspectives for the buyer and seller You order the goods or services The customer pays YOU You send the invoice You get the invoice You pay the supplier Your Business You ship the goods or services Order to Pay (Buyer Side) Order to Cash (Seller Side) OpenText Confidential. ©2014 All Rights Reserved. 14
Challenges for Buyers The cost of processing paper Verify and augment vendor data Creation of invoice by vendor Delivery of invoice to buyer Sorting and routing of invoice to A/P Entry of invoice into A/P system Validate math on invoice Match invoice to order, receipt & contract Assign to cost centres Ensure correct tax treatment Determine approval authority Circulate invoice for approval Resolve disputes with vendor Monitor status of approval Record expense in general ledger Aggregate payments due to vendor Store and archive for audit purposes Release payment Respond to vendor status inquiries Send instructions to bank Evaluate and negotiate trade discounts Distribute remittance advice to vendor OpenText Confidential. ©2014 All Rights Reserved. 15
Challenges for Sellers The cost of processing paper OpenText Confidential. ©2014 All Rights Reserved. 16
Global Compliance Challenges The global importance of indirect taxation With over 150 countries VAT/GST is the main transaction tax in the world A steady transition from sales tax to a VAT system Source: Deloitte, 2012 OpenText Confidential. ©2014 All Rights Reserved. 17
e-Invoicing Requirements - Europe Data Invoice data complies with country-specific tax authority rule Minimum required for an invoice Authenticity & Integrity Guarantees identity of sender & integrity of invoice data Electronic data interchange Digital signatures Business controls & clear audit trail Archiving & Audit Invoice archive complies with country-specific tax authority rules Stored for a specified period Easy, fast access for tax authorities OpenText Confidential. ©2014 All Rights Reserved. 18
e-Invoicing Requirements - Brazil Data Invoice format & data complies with country-specific tax authority rules Authenticity & Integrity Federal e-Invoicing Project (NF-e Project) Each taxpayer has unique tax ID and digital certificate issued by ICP-Brasil (or secondary) Nota Fiscal Electronica (NF-e) is signed then validated and authorized by the SEFAZ An auxiliary paper invoice (DANFE) must be issued Archiving & Audit Invoice archive complies with country-specific tax authority rules Stored for a specified period Access for tax authorities E-Invoicing is Mandatory OpenText Confidential. ©2014 All Rights Reserved. 19
e-Invoicing Requirements - Mexico Data Invoice format & data complies with country-specific tax authority rules Authenticity & Integrity Federal e-Invoicing Project Each taxpayer has a certificate (FIEL) as a unique ID, and a digital seal certificate (CSD) to sign invoices A Factura Electronica is signed by tax payer & issued to a PAC, validated, authenticated, unique ID assigned, then signed by the PAC (Timbrado) Archiving & Audit Invoice archive complies with country-specific tax authority rules Stored for a specified period Access for tax authorities E-Invoicing is Mandatory OpenText Confidential. ©2014 All Rights Reserved. 20
Enabling the Future e-Invoicing is a small part of a big story Decentralised High cost Fragmentation Non-standard processes/ systems Regional/Global Consolidation Process/system standardisation Labour arbitrage Dematerialisation B2B Process automation Self-service Financial Supply Chain Automation Buyer/supplier workflow automation and integration Supply Chain Finance Optimal financing for buyer/supplier communities OpenText Confidential. ©2014 All Rights Reserved. 21
Summary e-Invoicing is a small part of a big picture… PHYSICAL and FINANCIAL SUPPLY CHAIN APPLICATIONS Invoices Electronic Invoicing & Billing OpenText Confidential. ©2014 All Rights Reserved. 22
Summary B2B offers value across the entire order-to-pay process PHYSICAL and FINANCIAL SUPPLY CHAIN APPLICATIONS Catalogues Orders Logistics Invoices Documents Product List Sharing Purchase Order Management Global Shipping Track and Trace Electronic Invoicing & Billing End-to-End Message Tracking and Alerting Community Connectivity Payments Data Quality Treasury 20 Connectivity Solutions Electronic Payments Complex Business Rules and Data Quality Global Cash Management Expert On-Boarding and Community Intelligence OpenText Confidential. ©2014 All Rights Reserved. 23
Summary Key B2B Areas - What Supply Chain Teams are Already Doing Community / Collaboration Customisation EDI Complexity Cloud Integration OpenText Confidential. ©2014 All Rights Reserved. 24
E-Invoicing Initiatives & Case Studies
New e-Invoicing Initiatives VDA, the German automotive industry association, is introducing a new global message set based on EDIFACT. VDA4938 provides a recommendation for implementing the GLOBAL INVOIC standard. Odette organisation has introduced auto-gration, an open source ‘connector’ which allows the exchange of standard XML messages. Primarily targeting smaller suppliers in the upstream supply chain and companies in the aftermarket. EDIFICE high tech industry association has introduced a new message set called enliteB2B. As with auto- gration, enliteB2B helps to encourage smaller suppliers to exchange e-Invoices and other B2B documents. OpenText Confidential. ©2014 All Rights Reserved. 26
Case Studies Tyre Manufacturer CPG Manufacturer Automotive Supplier E-Invoicing in EMEA E-invoicing in EMEA E-invoicing in Mexico This company is one of the world’s largest manufacturers of tyres supporting customers in multiple industries. They support their customers on a truly global basis and have 69 production locations in 18 countries. OpenText GXS Active Invoice With Compliance was chosen as the preferred solution to help distribute tax compliant invoices to their customers in France. Longer term they will expand the solution to nine other countries and they will also be able to receive tax compliant einvoices from their suppliers. This company is now able to work towards their corporate initiative of eliminating paper and reducing their current 18% invoice error rate. This company manufactures its broad range of food, drink and confectionery products across 450 locations and distributes across 86 countries. Each region had a different e-Invoicing solution in place and they decided to consolidate on to one platform This company is a global supplier of interior systems to the automotive industry with 260 manufacturing locations around the world. Many of their customers including Ford and GM have established new plants in Mexico, one of the world’s fastest growing automotive hubs. OpenText GXS Active Invoice With Compliance was chosen as the preferred solution to allow 550 suppliers to be able to send invoices electronically by predefined web forms. OpenText GXS Active Invoice With Compliance was chosen as the preferred solution to allow this company to adhere to the specific eInvoicing regulations in Mexico. This company is now able to meet numerous invoice compliance regulations including Bulgaria where the AIC platform has been recently rolled out. OpenText GXS has also been chosen as the preferred e-Invoicing provider to support their other manufacturing locations around the world. OpenText Confidential. ©2014 All Rights Reserved. 27
Further Information on e-Invoicing www.einvoicingbasics.co.uk OpenText Confidential. ©2014 All Rights Reserved. 28
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